Extra £160m Crossrail taxpayer bill

One of the Crossrail tunnels under construction below the streets of Whitechapel, east London

The taxpayer will have to cover a £160 million shortfall in private-sector funding for London's Crossrail project after the Department for Transport (DfT) failed to secure the expected contribution from Heathrow Airport, a new report has revealed.

But the report from spending watchdog the National Audit Office (NAO) said the DfT has set aside a large enough contingency fund to cover the missing cash, and found that taxpayers' interests had been "well protected" on a project which is "on course to achieve value for money" and to be fully open by its 2019 delivery date.

Plans for the £14.8 billion rail line initially envisaged a £230 million contribution from Heathrow, to reflect the benefit the airport can be expected to gain from the new train link to central London, Maidenhead in Berkshire, and Brentwood in Essex.

But Heathrow's regulator, the Civil Aviation Authority (CAA), calculated that with the airport already running at or near capacity, Crossrail would deliver no net benefit in terms of additional passengers.

After the CAA set aside a provisional pot of £100 million, the DfT lowered its proposal to £137 million, but this month the regulator decided that Heathrow's contribution will be just £70 million.

The shortfall means that the DfT's direct contribution to the project will rise from a projected £4.8 billion to almost £5 billion, but this remains inside the £5.2 billion set aside in case it failed to secure sufficient funding from private sources, said the NAO.

Despite noting that "the Department has not secured all the private sector contributions for which it had hoped", the NAO said: " Taxpayers' interest in the Crossrail programme has so far been well protected... If progress in providing the new rail service for London and the South East can be maintained and risks managed, then the programme is on course to achieve value for money."

The watchdog said the strategic need for Crossrail has become "clearer over time as increased population and employment growth in London have been forecast". It was expected that the project's benefits will outweigh its costs, with DfT projections suggesting there will be £1.97 of transport benefits for every £1 spent.

But the NAO warned that "a number of risks remain", in particular the delivery of £1 billion-worth of trains and the appointment of the operator for the new service.

Chair of the House of Commons Public Accounts Committee Margaret Hodge said: " The Crossrail project has been well managed and controlled to date. It is on track to deliver on time and within budget, and they deserve praise for their success so far.

"I was concerned to learn that in 2009, the estimated costs of Crossrail had increased to £17.8 billion. However, Crossrail Limited, the Department for Transport and Transport for London appear to have worked together to reduce these estimated costs by around £3 billion, which is £1.1 billion below the initial funding package.

"The Department must now continue with the good work it has been doing with Transport for London and Crossrail Limited to ensure that they deliver the expected benefits of this vital project. In particular, they must get on with awarding the contract for the trains that will run on the line to avoid any delay in services starting."

A DfT spokesman said: "Crossrail is part of an unprecedented programme of railway investment across the UK and London which is helping deliver growth in the UK economy and improve our long-term competitiveness.

"The contribution from Heathrow Airport was always subject to a business case being approved by the CAA and therefore was never guaranteed.

"The department made provision for this fact in its planning and its grant towards the cost of Crossrail remains the same."